Tridge Stories
Tridge Stories

Essential private label insights for retail merchandisers

Sep 27, 2023
6 min read
Tridge Team

In the current retail sector, private labels are emerging as a dominant force. They offer businesses the opportunity to exert greater control over product quality, pricing strategies, and build a loyal customer base. As we enter a pivotal time in the retail industry, it is necessary for leaders and decision-makers to stay informed about the evolving trends that are shaping the private label market.

In this article, we will look at the recent developments and strategies that are steering the private label industry. From the increasing demand for sustainable products to the growing desire for personalized offerings, we explore the key insights that will equip retail merchandisers, producers and manufacturers for long-term brand growth. 

The growth of private labels 

Private labels in the food sector are experiencing significant growth, asserting their importance in the retail landscape. In the US alone, private label sales have experienced an astounding 46% growth since 2016 and grew to a $111 billion USD industry in 2022. Once considered generic alternatives to national brands, private labels have evolved into worthy competitors, often leading the innovation in various categories.

This growth is driven by a consumer base that is increasingly discerning, valuing both quality and affordability. For retail food merchandisers, this trend presents an opportunity to control every facet of the product lifecycle, ensuring both high quality while maintaining cost-effectiveness – both of which are compelling to consumers. 

Benefits of private labels for retailers

Before delving into the trends, it is necessary to highlight the benefits that private labels offer retailers. First is the improvement over quality control which allows merchandisers to adhere to strict benchmarks, building customer trust and gaining long-term loyalty. Moreover, private labels offer the flexibility to develop pricing strategies that are both competitive and lucrative, providing better value to consumers while improving margins.

Furthermore, private labels empower retailers to carve out a unique market space in a saturated environment. Through innovation and better access to data, merchandisers can cultivate a distinct brand persona that resonates with their target demographic. 

Current trends in the private label market

Several key trends are emerging in the private label market, especially in the food and beverage sector. These trends mirror changing consumer preferences and market dynamics, presenting a wide array of opportunities for retail merchandisers.

Sustainability and eco-friendly practices

A rising trend in the private label market is the demand for sustainable and environmentally conscious products. Consumers are increasingly seeking out brands that align with their values, which include clean labels and transparency in product development. Thus, businesses are investing more in eco-friendly products, utilizing sustainable materials and adopting green manufacturing practices, while disclosing ingredient origins and production methods to meet demand. 

The premiumization of private label products

The private label sector is transcending its association with budget-friendly alternatives to more premium offerings. This transition caters to consumers seeking high-quality products without the premium price tag. Retailers are enhancing the quality and image of their store-brand offerings which includes meticulous ingredient sourcing and partnerships with reputable suppliers, in order to compete with established national brands

Branching out into niche and new markets

Retailers are also aligning their product portfolios with the growing demand for health-conscious and alternative choices. For instance, retailers are offering a range of niche products tailored to meet specific health and dietary preferences, such as organically-sourced ingredients and gluten-free, low sugar, and plant-based alternatives. 

Upgraded packaging and designs 

To stay competitive with national brands and build their own identity, retailers are also adopting more modern and eye-catching packaging that grab consumers' attention. This includes designs and text that differentiate from competitors, along with innovative packaging solutions driven by sustainability and advanced technology. 

Challenges and opportunities for retailers 

Despite the promise of private labels, the journey in the private label sector has its challenges. Thus, it is imperative for retail merchandisers to recognize these hurdles and plan accordingly.

Building brand awareness and trust remains one of the main challenges for private labels due to the strong brand recognition of national labels. This approach requires significant investment in marketing to relay the value proposition of private label products effectively to gain consumer trust. 

Conversely, the evolving retail landscape and shifting consumer behaviors present a wide range of opportunities. By keeping abreast of market trends and consumer tastes, retailers can discover untapped market segments and craft private label products that cater to specific consumer needs and aspirations.

The future of private labels 

Private labels are poised to play a pivotal role in shaping the future of retail. The shifting consumer preferences offer new opportunities for private brands to influence the retail landscape, asserting themselves as frontrunners in their respective categories.

By adopting sustainable practices, delivering niche offerings, and exploring premium market segments, retailers can position their private label brands for success. Additionally, with online tools like e-commerce and advanced data-led reports, retailers can extend their market reach and consumer engagement. As we envision the future of private labels, it is incumbent upon retail food merchandisers to adapt to consumer preferences, stay updated with market reports, and leverage technology. 

Key takeaways

  • Private labels have evolved from being seen as lower-quality alternatives to becoming formidable competitors in the retail market
  • Retailers need to continuously adapt to market trends and consumer preferences to leverage the growing opportunities and new market segments around private brands 
  • Retail manufacturers have greater control over product quality and pricing with private labels, facilitating brand differentiation and building customer loyalty

To further your understanding of the private label industry, we invite you to explore the latest insights and reports from Tridge covering the Americas, Africa, Asia, and Europe.

Other Related Blog Posts